[PPT] - Second Quarter 2009 Second Quarter 2009 Earnings Conference Call PowerPoint Presentation

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Second Quarter 2009

Earnings Conference Call

Second Quarter 2009

Earnings Conference Call

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Forward-Looking Disclosure Forward-Looking Disclosure

This information and other statements by the company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and

bjectives for future operation, and management’s expectations as to future performance and operations and the time

by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar

expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no
bligation to update or revise any forward-looking statement. If the company does update any forward-looking

statement, no inference should be drawn that the company will make additional updates with respect to that statement

r any other forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others; (i) the company’s success in implementing its financial and operational initiatives; (ii) changes in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the company. Other important assumptions and factors that could cause actual results to differ materially from those in the forward- looking statements are specified in the company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the company’s website at www.csx.com.

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Executive Summary Executive Summary

Michael Ward Chairman, President and Chief Executive Officer

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Second quarter performance . . . Second quarter performance . . .

Revenue declines 25%

— Significant declines in both volume and fuel recovery — Core pricing momentum intact

Operating strength intact

— Rightsizing resources to the current volume environment — Safety and service levels strong — Operating ratio at 73.4%

Earnings at 2007 levels

Second Quarter EPS from Continuing Operations

$0.71 $0.95 $0.72

2007 2008 2009

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Sales and Marketing Review Sales and Marketing Review

Clarence Gooden Executive Vice President Sales and Marketing

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Revenue declines 25% to $2.2 billion Revenue declines 25% to $2.2 billion

Revenue in Millions

$2,185 $2,907 $97 ($596) ($223)

Q2 2008 Rate/Mix Fuel Price Volume Q2 2009

RPU $1,549 Volume 1,411K Revenue $2,185M Note: See Fuel Surcharge Reconciliation

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Economic environment drives 21% volume decline Economic environment drives 21% volume decline

Year-Over-Year Volume Change

(7%) (23%) (13%) (53%) (21%) (22%) (14%) (41%)

Coal Merchandise Intermodal Automotive

First Quarter Second Quarter

RPU $1,549 Volume 1,411K Revenue $2,185M

27% 37% 32% 4% % of Total

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Core pricing stable; RPU lower on fuel surcharge Core pricing stable; RPU lower on fuel surcharge

Note: “Same Store Sales” price increases exclude impacts from fuel and mix RPU $1,549 Volume 1,411K Revenue $2,185M

Year-Over-Year Change

6.5% 6.5% 6.7% 6.8% 6.4% 6.2% 6.5% 6.5% 6.6%

6.9% 8.0% 10.5% 14.5% 18.3% 21.2% 14.0% (5.4%) 0.2%

Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

Same Store Sales Price Increase Total Revenue per Unit

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Coal revenue declines 20% Coal revenue declines 20%

Utility Export Other

Coal Categories

Second Quarter Year-Over-Year Change

(20%) (21%) 2%

Revenue Volume RPU

Second quarter summary

— Export declines on lower global demand — Utility down on low demand, high inventories and low gas prices

Ongoing drivers

— Domestic and global demand expected to remain low — Utility stockpiles remain above target levels — Natural gas prices expected to remain at low levels near-term

RPU $1,765 Volume 375K Revenue $662M

79% 79% 12% 12% 9%

Second Quarter Volume

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Merchandise revenue declines 26% Merchandise revenue declines 26%

Merchandise Categories

Agriculture Housing Industrial 39% 39% 32% 32% 29%

Second Quarter Year-Over-Year Change

(26%) (22%) (5%)

Revenue Volume RPU

Second Quarter Volume

Second quarter summary

— Steel production cut by half — Housing starts and overall construction remain weak — Phosphates decline significantly

Ongoing drivers

— Several merchandise markets appear to have stabilized — Industrial sector, housing and construction likely remain weak — Impacts in agricultural sector expected to be less severe

RPU $2,021 Volume 525K Revenue $1,061M

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Automotive revenue declines 45% Automotive revenue declines 45%

Big-3 New Domestics

Automotive Categories

Second Quarter Year-Over-Year Change

(45%) (41%) (6%)

Revenue Volume RPU

Second quarter summary

— Consumer demand and inventory correction drives volume — Bankruptcy filings and plant shutdowns also impact business

Ongoing drivers

— Volume impacts to moderate further in third quarter — Production changes:

Industry restructurings Growth of foreign brands, imports New plant start-ups

RPU $2,093 Volume 54K Revenue $113M

53% 53% 47% 47%

Second Quarter Volume

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Intermodal revenue declines 24% Intermodal revenue declines 24%

Domestic International 60% 60% 40% 40%

Intermodal Categories

Second Quarter Year-Over-Year Change

(24%) (14%) (12%)

Revenue Volume RPU

RPU $637 Volume 457K Revenue $291M

Second quarter summary

— International volume down on lower imports and exports — Domestic volume growth on truckload conversion — RPU lower due to fuel recovery and competitive truck prices

Ongoing drivers

— Low global trade and consumption levels — Highly challenging truck market

Second Quarter Volume

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Sales and Marketing wrap-up . . . Sales and Marketing wrap-up . . .

Markets appear to have stabilized at current levels

— Year-over-year decline in non-coal markets moderated slightly in the quarter

Double-digit volume declines expected for third quarter

— Linehaul revenue for eight of ten markets expected to be unfavorable

Maintaining reliable service product for our customers

— Coordinating with customers to further right-size our resources

Selling the value of rail transportation

— Preparing for the eventual economic recovery

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Operations Review Operations Review

Tony Ingram Executive Vice President Chief Operating Officer

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Responding to challenging business conditions Responding to challenging business conditions

Safety Safety Productivity Productivity Service Service Leadership Leadership Discipline Discipline Execution Execution Performance Excellence

Safety performance remains strong
Rightsizing producing savings and

helping offset impact of lower volume

Network operations and service

reliability strong

Leadership Leadership Leadership Discipline Discipline Discipline Execution Execution Execution

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Helping lead one of the Nation’s safest industries Helping lead one of the Nation’s safest industries

FRA Personal Injury Rate

1.45 1.04 1.22 1.30

Q2 2006 Q2 2007 Q2 2008 Q2 2009

FRA Train Accident Rate

3.53 2.73 2.63 2.22

Q2 2006 Q2 2007 Q2 2008 Q2 2009

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Train network continues to track lower volume . . . Train network continues to track lower volume . . .

(60%) (50%) (40%) (30%) (20%) (10%) (0%) 10%

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Week Carloads Road Crew Starts

Year-Over-Year Change in Volume and Crew Starts

Volume down 17% Crew starts down 15% Volume down 17% Crew starts down 15% Volume down 21% Crew starts down 20% Volume down 21% Crew starts down 20% Q2 2009 Q1 2009

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. . . with key resources being rightsized accordingly . . . with key resources being rightsized accordingly

Q2 2009 Q1 2009

Active Locomotives

2,900 3,100 3,300 3,500 3,700 3,900 4,100

1 6 11 16 21 26 2009 2008

Q2 2009 Q1 2009 Down 9% YOY Down 9% YOY Down 17% YOY Down 17% YOY

Active T&E Employees

9,300 10,000 10,700 11,400 12,100 12,800 13,500

1 6 11 16 21 26 2009 2008

Down 10% YOY Down 10% YOY Down 17% YOY Down 17% YOY

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Broader rightsizing efforts are gaining traction Broader rightsizing efforts are gaining traction

Year-Over-Year Change in Volume and Resources

(9%) (12%) (16%) (17%) (17%) (20%) (21%)

Active Mechanical Employees Yard Crew Starts Local Crew Starts Active T&E Employees Active Locomotives Road Crew Starts Volume

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Service Reliability

On-time Originations

77% 80% 75% 83%

Q2 2006 Q2 2007 Q2 2008 Q2 2009

On-time Arrivals

60% 69% 65% 81%

Q2 2006 Q2 2007 Q2 2008 Q2 2009

Service levels strong on stable network operations Service levels strong on stable network operations

Network Performance

Train Velocity (mph)

19.6 20.4 20.0 21.7

Q2 2006 Q2 2007 Q2 2008 Q2 2009

Terminal Dwell (hours)

25.1 23.5 23.3 24.1

Q2 2006 Q2 2007 Q2 2008 Q2 2009

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Operations wrap-up . . . Operations wrap-up . . .

Maintaining strong focus on safety performance

— Helping lead one of America’s safest industries

Rightsizing resources and driving productivity

— Working aggressively to help stabilize the operating ratio

Providing reliable customer service

— Network operations remain strong at lower resource levels

Leadership, Discipline and Execution Leadership, Discipline and Execution

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Financial Review Financial Review

Oscar Munoz Executive Vice President Chief Financial Officer

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Second quarter earnings summary . . . Second quarter earnings summary . . .

Second Quarter Results Dollars in millions, except EPS 2009 2008 Variance Revenue Expense $ 2,185 1,603 $ 2,907 2,190 $ (722 587 ) Operating Income $ 582 $ 717 $ (135) Interest Expense Other Income (net) Income Taxes (139 10 (168 ) ) (133 17 (209 ) ) (6 (7 41 ) ) Earnings from Continuing Operations $ 285 $ 392 $ (107) Fully Diluted Shares in Millions EPS from Continuing Operations 395.4 $ 0.72 415.1 $ 0.95 19.7 $ (0.23)

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Fuel surcharge lag impacts quarter by $33 million Fuel surcharge lag impacts quarter by $33 million

Positive Impact Negative Impact

Fuel Surcharge Lag Impact

Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q1 2008 Q2 2008

($33) ($33) Million Million $38 $38 Million Million

Weekly Highway Diesel Fuel Monthly Highway Diesel Fuel (two-month lag)

$39 $39 Million Million $150 $150 Million Million

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Strong cost focus drives expenses down 27% Strong cost focus drives expenses down 27%

Second Quarter Operating Expenses in Millions

$1,603 $2,190 $21 ($319) ($70) ($219) 2008 Non-fuel Inflation Fuel Price Net Casualty Reserve Adjustment Productivity, Rightsizing and Other 2009

Net Deflation of $198 million Net Deflation of $198 million

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Fuel expense declines 66% Fuel expense declines 66%

Gallons Per Thousand Gross Ton Miles

1.24 1.22 1.18 1.13

Q2 2006 Q2 2007 Q2 2008 Q2 2009

Second Quarter Fuel Analysis in Millions

2008 Fuel Expense $ 537 Price Volume Efficiency Non-Locomotive (219 (91 (22 (20 ) ) ) ) Subtotal (352) 2009 Fuel Expense $ 185

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MS&O expense declines 28% MS&O expense declines 28%

Second Quarter MS&O Analysis in Millions

2008 MS&O Expense $ 513 Net Reserve Adjustment Volume-related Savings Proxy-related Costs Other (70 (41 (18 (16 ) ) ) ) Subtotal (145) 2009 MS&O Expense $ 368

Note: Q2 2006 excludes $126 million of gains on insurance recoveries

MS&O Expense Dollars in Millions

$461 $470 $513 $368

Q2 2006 Q2 2007 Q2 2008 Q2 2009

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Labor and Fringe expense declines 11% Labor and Fringe expense declines 11%

Employee Headcount

34,451 34,166 33,082 29,878

Q2 2006 Q2 2007 Q2 2008 Q2 2009

Second Quarter Labor Analysis in Millions

2008 Labor Expense $ 733 Labor Productivity Incentive Compensation Inflation Other (70 (16 16 (9 ) ) ) Subtotal (79) 2009 Labor Expense $ 654

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Other expenses collectively decrease 3% Other expenses collectively decrease 3%

Other Costs in Millions

$216 $222 $227 $229 $107 $112 $98 $62 $60 $68 $69 $131

Q2 2006 Q2 2007 Q2 2008 Q2 2009

Higher capital base increases

depreciation expense

Rent expense declines on

lower volume

Inland Transportation costs

increase due to inflation

Inland Transportation Depreciation Rents $409 $389 $407 $396

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Productivity and rightsizing driving costs lower Productivity and rightsizing driving costs lower

Second Quarter Cost Structure in Millions

2009 2009 2008 2008 % % Variance Variance Short-term Variable Costs

Fuel Car Hire Unit Train Crews Third Party Services

$ 415 $ 784 47% Long-term Variable Costs

Terminal Operations Scheduled Network Crews Yard and Local Crews Locomotives and Freight Cars

452 546 17% Fixed and Indirect Costs

Depreciation Track Maintenance Pension and Property Taxes General and Administrative Technology and Other

736 860 14% Total Operating Expenses $ 1,603 $ 2,190 27%

Note: Normalizing for the fuel price impact and casualty reserve adjustments, total operating expenses declined 12%

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Financial wrap-up . . . Financial wrap-up . . .

Fuel environment will continue to act as a headwind

— Cycling significant lag benefits in second half of 2008

Driving cost structure to lower business levels

— Rightsizing and productivity efforts produce across-the-board results

Balance sheet remains healthy

— Strong liquidity with substantial cash and short-term investments

Operating ratio remains stable in challenging economy

— Positions company to emerge stronger when the economy recovers

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Concluding Remarks Concluding Remarks

Michael Ward Chairman, President and Chief Executive Officer

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Relentless pursuit of excellence . . . Relentless pursuit of excellence . . .

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Appendix Appendix

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Fuel Surcharge Reconciliation Fuel Surcharge Reconciliation

Second Quarter Dollars in millions Dollars in millions 2009 2009 2008 2008 Variance Variance Total Rail and Intermodal Fuel Surcharge Recovery $ 67 $ 365 $ (298) Portion of year-over-year variance that is volume-related Portion of year-over-year variance that is fuel price-related $ (75 $ (223 ) ) Since total fuel surcharge revenue includes both rail and intermodal, it is different from the report filed with the Surface Transportation Board, which excludes CSX Intermodal fuel surcharge revenue.

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